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Carlsberg profits fall on weaker Russian sales

Tue, Feb 21, 2012, 00:00

CARLSBERG, THE world’s fourth-largest brewer, said yesterday that full-year profit declined 4.2 per cent because of a weaker Russian market and forecast no improvement this year as sales fall in northern and western Europe.

Operating profit excluding some items fell to 9.8 billion Danish kroner last year, the Copenhagen-based company said, adding that earnings on that basis this year will be “at the level of 2011”.

Carlsberg also said it plans to acquire the minority shares in its Russian Baltika unit at a maximum cost of DkK4.4 billion.

Carlsberg rose as much as 3.7 per cent in Copenhagen trading after “it took the market some time to realise that guidance was just cautious and that there was nothing nasty lurking in the background”, said Trevor Stirling, an analyst at Sanford C Bernstein in London.

Buying the rest of Baltika will be “immediately earnings enhanc- ing” and provide “greater operational flexibility”, the firm said.

Carlsberg owns 85 per cent of Baltika, Russia’s biggest brewer, which has struggled with increased levies on beer and more stringent regulation of alcohol sales in Russia.

Carlsberg was up 3.5 per cent at DkK444.1 as of 12.16pm, reversing a decline of as much as 3 per cent.

The brewer said it expects “modest growth” in the Russian market this year, while northern and western Europe will show low single-digit declines, and Asian markets will probably grow.

Economic turmoil across Europe and Russian regulation have weighed on sales at Carlsberg, which cut its full-year profit forecast in August after bad weather in the region and high commodity prices reduced profitability. Russia’s beer market contracted by about 3 per cent last year, Carlsberg estimated.

The brewer’s market share in the country slid to 37.4 per cent in 2011 from 39.2 per cent in 2010, it said.

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Market-share losses were due to increasing prices earlier than competitors, which engaged in high levels of discounting, Carlsberg said.

Chief executive Jörgen Buhl Rasmussen said yesterday that Carlsberg was in a better position to reverse Russian share losses. – (Bloomberg)